The government is scrambling to shift cash to the unemployment fund to cover a €50 million shortfall as the financial crisis continues to push up the number of jobless.
With just €41.9m available, the fund has to pay out €86.5m, a creating a shortfall of €44.6m for 2013.
Government officials assured the House Labour Committee yesterday that jobless benefits would be covered.
This is not the first time that authorities have had to juggle the budget to cover a deficit in the fund, MPs heard.
But there is concern about the dramatic increase in unemployment – now hovering at a record 17%.
House Labour Committee Chairman, Akel’s Andreas Fakontis said Cyprus had seen the highest increase in the annual unemployment rate in the European Union.
He said one in two young people in Cyprus are unemployed while the number of long-term unemployed people is also rising.
By June, 32,678 people had applied for unemployment benefit, up from 28,812 in 2012. Fakontis added that 40% have been unemployed for six months, 24% for six to 11 months and 36% for more than a year.